Marketing Strategy | Hydrogen Creative

blog: Marketing Strategy

Tag: Marketing Strategy

The Government is the Nanny of the State

It could have been the worst teaching night of my experience, talking for 2.5 hours about the role of government in business to first year Under-Grad Business students. (okay, we took a five minute break). It ended up not quite so bad after I hit on the metaphor of the Government being the Nanny of the State.

When the children play nice, Nanny gets on with her knitting. Catch a boo-boo? Run to Nanny. Misbehave? Watch out for Nanny. Playing the bully? Nanny takes the bully down. Best case scenario, Nanny stays away until it’s time for treats.

The consensus of the class was: “Keep Government out of business as much as possible.” “Only as a last resort.” “Well, if the economy is completely failing, then of course we do need Government to step in.” I will not rant politics because the general consensus is “Right now we need Nanny”.

One part of my presentation to take home for the customer-centric marketer was ‘The reason why some industries self-regulate: to avoid the imposition of external regulation’. The ad industry is a good example in many countries, where advertising standards are self-adopted, rather than deal with the government as the ombudsman of integrity in advertising. Financial markets were also self-regulating (:o(.

The key point to be made is that, when an industry regulates itself, it generally does so with the goal of protecting itself from the consequences of being regulated from elsewhere. Regulation that is seen to be done, is not designed to protect the average Joe. It protects the industry it serves from a greater imposition of authority. Kids playing by the rules to keep Nanny out, rather than to be really, really fair. Did I mention that Financial markets were self-regulating (:o(

I believe increasingly, that the standards by which all commercial activity will become judged is through the regulatory lens of the CUSTOMER. The customer represents the primary moral imperative to ensure business continuity, customer frequency and loyalty. I wonder how the class would have reacted if I had inserted the word CUSTOMER in place of government throughout the entire presentation? We are not so resistant to the actions of our customers within private enterprise as we are to the Nanny of the State..

The Nanny of the State certainly has the customer in mind in times of crisis. Stimulation of retail activity, Keynesian economics to prime the pump of consumer spending et al. When will the penny truly drop that, by applying the right integrity and values within our business and our marketing, we can bypass the Government and do very nicely?

Written By Jon|Advertising Truths, Marketing Strategy, Uncategorized|Comments Off

You shall not covet

I have always been puzzled by the biblical text that puts “You shall not covet” as the finishing flourish of the 10 Commandments, as if this is more heinous than murdering, lying, cheating, stealing. There is no action involved. It is more about attitude. What’s the problem here? And what does it have to do with customer-centric marketing? (The committed acolytes at this point will intone, “Customer-centric marketing embraces Life, the Universe and Everything” in 6-part harmony).

But if you think for a moment about what can transpire in the commercial world, based on the desire to achieve what someone else has (that you have not) then you have a frequent motive for businesses, sometimes egregiously, sometimes sublimely lying, cheating and stealing, to achieve their goals. In the geo-political and ethnic world, you get war.

So, in a nutshell, covetousness is a great way to kill any chance of a relationship.

When I speak about the Goals-centric enterprise (in contrast to customer-centric), there is a question as to the motive behind the goals of the enterprise. Covetousness, some would say, is the root of ambition, of aspiration, of even invention. If the emotion exists there must surely be a positive angle.

Relationships are also goal-centred. It just comes out that the goal of a relationship is to give to each other in a harmonious state of reciprocity, not to take from each other in a duel of one-upmanship. Coveting is also about exercising Control: to manipulate the relationship so as to exact the most reward for oneself.

Media and advertising are playgrounds for the exercise of control. Share of Mind: what is that? It is the calculated manipulation of media to control the consumer. Marketers talk about it as if it were a game of marbles. Hey, isn’t a game of marbles also about control? It is in the nature of competition to exercise influence and control in order to achieve your goals. But it can go wrong, because when the drive to control gets out of control something Evil happens.

Customer-centric marketing is about building relationships based on the customer’s values, separate from the latent desire to control. To control is inherently human, but to dominate is problematic. In friendships and relationships we exercise control to create an environment in which our wishes are shared. Competition comes from other potential relationships. The best, best friend is the one with whom we share such a harmony that other potential relationships cannot compete. There is some element of control in all relationships, but it is maintained within a healthy, bi-lateral state.

When your product, service or business fully embraces all the values and needs that your customer has for that slice of their life, competition cannot breach the relationship. BUT, when your product, service or business takes on that covetous, goals-centric mentality, the customer will get shorted out at some point, when the price goes up or the quality goes down or the services are cut back, for the wrong reasons. Relationships can even endure hardship, if they are based on maintaining shared values. There is a marketing technique for reaching out to these values and building relationships. I call it Touch Marketing, and I use it all the time.

Back to topic: so, the root of all evil is Covetousness. And the remedy is honest-to-goodness relationship building: in politics, in war, and in business.

Written By Jon|Customer Focus, Marketing Strategy, Relationship Marketing, Uncategorized|Comments Off

Which End of the Telescope Do You Use?

If you had never seen a telescope before it would be reasonable to look through the large end. It is wider, offers more light, and it could be assumed its primary purpose was to shrink things. There is a natural tendency to put your goals first, even when your intention is to focus on the customer. So the customer is smaller, remote and subservient to your marketing goals. It’s a happy thought to many a brand marketer that if the customer had its eyeball at the opposite end of your telescope it would see you many times greater than reality.

By some quirk of our human nature (call it ego), we all see our own perspective in magnification and everyone else’s in minimilization. It is not a simple thing to switch the roles around. But the truth is that we are judged, not from our own perspective, but from that of the customer.

For example: I consulted with a construction company to develop a marketing platform within a key vertical. After research and competitive analysis I presented the the strategy and execution framework. The VP Marketing announced that they had implemented the same strategy 4 years earlier and it had failed in the execution. It wasn’t until my presentation that they realized they had used the wrong end of the telescope.

You can have the right data, the right strategy and manage to completely alienate your target market by thinking that the telescope is pointed in your direction.

Written By Jon|Marketing Strategy|Comments Off

Honesty In Relationships: Part II

Honesty In Relationships: Part II

Absolute Truth

If there is such a thing as absolute truth, it exists outside of this world. As much as we regard honesty, integrity and trust as roadmaps for relationships, they are relative terms. This represents a risk to business continuity. Any decision you make could compromise your business relationships because of the external impression created by your actions. This occurs even at the most basic level: to choose with whom you want to have a relationship. It is a practical need, yet it is also confining. Since “you can’t be all things to all people” your representation of your well-intentioned relationship is exclusive to these choices. When those whom you exclude put you on the wrong side of their loyalty values we call it pigeon-holing. Marketers are often confounded by typecast restrictions that have been molded around a business by customers with whom it has never had a relationship. And most customers depend on pigeon-holing to sort through their decisions.

Theory of Relativity in Business Relationships

There is a relativity formula to relationships:

THE BENEFIT DERIVED FROM A RELATIONSHIP IS COEFFICIENT TO THE PERCEIVED VALUE OF THE RELATIONSHIP.

From this we learn that the perceived value of the relationship will increase or decrease depending on the value of the benefits gained. Also that the desire to establish a relationship is based on the expectation of its rewards.

Value-Add

The critical idea is that, whenever the benefits gained exceed the perceived value of the relationship, then the perceived value will increase to match the benefits. This is how ‘value-add’ expands loyalty and frequency into business continuity. Adding value makes the difference between a performer and a super-performer in business relationships. It is the ingredient that can break a business out of the mold of typecasting e.g. to enable a volume discount producer to enter a luxury market (Toyota/Lexus). It is also the most challenging component of sustaining a relationship, as the constantly rising of the bar of expectations represents greater consequences to underperformance. You can never go back to ‘ordinary’, because that would be a reduction in value. But, that issue aside. everyone can live with thought that continually adding value creates a consensus in relative truth.

Pull the Wrong Lever And You Fall

Perceived value and benefit rewards are so closely linked that misguided use of any levers in the relationship can create schism and distrust.

Take, for example, wholesale price discounting: once the customer has experienced a price discount, this benefit reward can easily become a defining aspect of the relationship. The customer expects the lower cost. In counterpoint, the retailer gets reduced benefit from the transaction, so its sense of value decreases. We now have relativity divergence in truth and trust: the customer’s benefits have increased and the retailers value of the relationship has decreased. Consequently, the retailer may compromise the value of the relationship to the customer, by merchandising lower quality goods, reducing customer service, reducing product selection etc. Retailer’s view of truth: my customer is a price chiseller.

Customer’s view of truth: my retailer is a price chiseller.

Neither position might be true. The reason for the contradiction is that the retailer used a market lever that was counter-productive to increasing the value of the relationship.

The 365-Day Sale

Price in retail has become the most common lever used by retailers to lure customers, and in juxtaposition, customer service and satisfaction has dropped. It has been replaced by refunds, warranties, and call centres. Recall our formula for relativity: the customer expects more from the relationship relative to price, but experiences the negative impact on other important components of the relationship such as service, quality or choice. When relative truths are in conflict, each party will withdraw to its corner, exploit for its own interests and abdicates loyalty when these are not served.

Addiction Vs. Loyalty

It is the predicament of our market mentality that the most successful business is the bottom-feeder in the cost/price matrix. I would argue that customers are not loyal to Wal-Mart – they are addicted to Wal-Mart. Wal-Mart has built its customer relationship on the price lever, and expands the benefit rewards it brings to its customer by expanding its range of merchandise with the same promise. By focusing on this one lever, Wal-Mart has worked this relativity formula consistently into tremendous profitability. How does the formula work for Wal-Mart? The benefit its customer gains from shopping at Wal-Mart (price) is maximized by consistently shopping at Wal-Mart for all its needs, and so the perceived value of the relationship to the customer has matured into a dependency. The consequences to the retail sector are widespread. Everyone is chipping away at price and we live with a discount mentality. There is no consumer segment that Wal-Mart will shirk from if it can consistently achieve its goals. PRICE is now the relative truth that has redefined many marketing relationships and reduced them to just this one lever.

But price-sensitivity is not the only lever for the sustainability of a relationship. As long as it is built on honesty and trust as defined by the customer’s needs within the relationship there are other levers that influence purchase decisions.

Segue

I had planned to spend more time in this entry discussing these other levers. Let’s say for now that the purpose of this entry – to demonstrate how truth is relative to the customer and that a practical business action could have a correspondingly unfavourable customer reaction – is served. Every action a business takes has consequences that are broader and deeper than it usually prepares for. This is because it rarely focuses on truth relative to its customer’s perspective.

Written By Jon|Advertising Truths, Brand Integrity, Customer Focus, Marketing Strategy, Relationship Marketing, Uncategorized|Comments Off

Honesty in Relationships: Part I

When goals-achievement is the number one priority of a business, the temptation to disguise weaknesses is a real challenge for marketers and legal departments. I remember a copywriter complaining that her clients always ruined her copy by insisting on accuracy. The creative fabrication sold the product so much better.

Too many businesses market their beliefs without testing their own integrity. Expressions like ‘Best’, ‘Leading’, ‘#1’, ‘Lowest Price’, ‘Largest Inventory’, ‘Top Rated’ and ‘Most Successful’ appear throughout marketing copy. The customer who finds a lower price elsewhere will not trust such a claim again. Once the veil of honesty is damaged by the revelation of deception, whether big or small, trust evaporates and is hard to recover.

The Alchemy of Concealment

The temptation to deceive or conceal the truth is part of the human psyche.

Q: “How’s business?” A: “Busy.”

The truth remains agreeably hidden. But, when truths are revealed there can be significant consequences. Consider the impregnable Bike Lock that was opened using a Bic pen. Is it possible that the market leader in bike security products didn’t want its vulnerability to be known? Or was it an unfortunate embarrassment? However framed, doubt formed in the mind of the customer. There are PR companies that specialize crisis communications, when a damaging truth is exposed in an unforgiving world of customers demanding an explanation. Enron. Blatant. No mercy. Once a lie is exposed, society has the will to vilify the perpetrators and to extract their confession.

A Study of Truth & Deception

As a child my elders posited my future in advertising. My wisdom of nine years replied, “Why would I work in a job that is about telling lies.” I had experienced the disappointment of the picture in the ad being better than the product inside the box. Another rule I picked up was: “Don’t trust show-offs. They only please themselves.” A business that exaggerates its delivery cannot be sustained.

As an adolescent, in order to get out of trouble, I learned that the most believable lie is the one that is closest to the truth. Marketers are often pressured to tell the ‘closest’ version of the truth to make their employers or clients succeed. I learned a law similar to the law of gravity when it comes to misleading people: the bigger the deception, the bigger the fall when the truth comes out. And the truth has a way of coming out. I won’t reveal the details of how I learned that lesson, but it was learned well. The more we mislead customers, the greater the repercussions we will have to endure.

At the age of 19 I came to the realization that, if I acted in good conscience, there would be no cause for deceit. As a customer-centric marketer for 11 years, and a career marketing professional of 20-something years, I am able to demonstrate to my clients that if a promise is not credible and deliverable to their audience, it is counterproductive to their objectives.

Putting Values on Truths

Honesty in marketing relationships is about truly representing and supporting what is important to each customer. Failure to deliver on a marketing promise is tantamount to a lie in the customer’s dictionary of business terminology. Your integrity is really defined by your commitment to the relationship. Any actions and statements that could prove damaging to the relationship need to be thought out ahead of time and revised.

The focus of customer-centric marketing is to understand truth from the customer’s perspective. Touch Marketing, the technique I practice within my studio, is the determination and communication of customer values (their truths) with emotional relevance and the demonstration of commitment to support those values. This is counter posed to the product (or brand) as ‘the hero’

By looking through the other end of the telescope I have come to realize that trust is what bonds a relationship, and honesty is the basic ingredient.

Touch Marketing is not just honest and emotionally relevant – it engenders attachment, loyalty, frequency and continuity within a marketing relationship. Experience is the truth the customer believes.

The next part of Honesty in Relationships will discuss how to shift perspective away from what the business inherently believes towards the customer perspective.

Written By Jon|Advertising Truths, Customer Focus, Marketing Strategy, Relationship Marketing, Uncategorized|Comments Off

CORPORATE MASH-UPS CAN PROPEL YOUR BUSINESS THROUGH TOUGH TIMES

Corporate thinkers and marketing strategists wondering how best to navigate through turbulent economic downswings should turn their attention to non-competing products, where they can add customer convenience and value while reducing cost-of-sale.

Because, let’s face it, in this economy you have limited choices. You could: – Spend your money on restructuring consultants – Slash prices in the hope that keeping busy will hide your losses – Increase incentives and slash prices for even greater losses – Stare frozen into the headlights and wait for the inevitable…

Or be creative. Find more values to sell to your existing customers and enable them to do more with less.

Here are some examples:

B-2-B

Office Cleaning & Building Security – lower property management costs and improve on the cleaning staff integrity. Payroll Processing & Job Placement Agencies – as payroll fee income drops earn commissions on placements of the displaced staff, as well as increase reach for your payroll services.

Couriers & Food Services – fill up the water fountain/coffee machine while you pickup/drop-off the packages. Cut your cost of distribution and make margin on the sale of snacks.

Computer Manufacturers & Airlines – digital and physical connectivity from point-to-point, e.g. in-flight hookup to your virtual desktop, best price reservations to frequently-used, business destinations on the purchase of notebooks with extended warranties. Etc.

B-2-C

Toys & Tools – for the chip-off-the-old block, an incidental purchase for dads while they calculate how much drywall they need.

Fashion, Flowers & Gifts – you can surely trust your fashion stylist/boutique to know how to create the right bouquet or pot pourri for you.

Shoes & Socks – socks wear out more quickly than shoes. Shoe sellers should stock socks (say 10 times quickly) as a traffic driver and an incidental profit booster.

Home Entertainment Systems & Movie Studios – create a utopia of choice and a measurable market to forecast demand for in-home or out-of-home entertainment metrics. Etc., etc.

You can do this in a number of ways:

strategic partnerships
mergers
cross-promotions.

You have to care and share to make it work. And be customer-centric in bringing the value home to the customer, so that they can gain to ease their pain.

There are thousands of potential mash-up opportunities. These came to mind quickly, to make the point. Corporate mash-ups can be a low-cost, low-risk investment. Each party has control of its own customers. The strategy is to be customer-centric, to increase your value to your customer and reduce their total outlay for the same services. Unlike a straightforward customer promotion, a mash-up increases your reach into the market as your partner extends it to their customers. So your total market reach is expanded without additional marketing cost to you. It’s not a freebie, and the discount comes through real cost-efficiencies, not profit slashing.

Tangential thinking comes naturally in this business; so if you have a sense of the possibilities but no immediate notion of how to move it forward, call me.

Written By Jon|Marketing Strategy|Comments Off

ENTITLEMENT AND THE FREEBY GENERATION

If civilized society has anything to gripe about concerning the psychology of the Next-Generation it is the notion of Entitlement. Everyone feels entitled to whatever they want. Whether it is media attention, petty theft, massive fraud, obscene public demonstrations, more pay for less work, or the calculated elimination of ‘whoever gets in my way’, the overbearing sense of “What’s right in my eyes, is not wrong” is at the core of a society overfed on a diet of Entitlement.

I was musing on the source of this growth of human failing and I arrived at the conclusion that it is We Marketers that have fed the beast. We took a youngling generation and bombarded them, not only with hyped-up aspirations, but also the tempting lure of anything FREE – the unearned reward offered for future gain. Nothing breeds a false sense of entitlement better than providing something for nothing to someone that has done nothing to deserve it. It is the classic case of the parent that spoils the child. And, if you consider carefully enough you will see that the lure of so many competing brands has been carved out of the ‘I’ll give it you for FREE’ promotion. To the extent that mortgages went sub-prime, and that Central Banks are actually contemplating PAYING interest to get you to borrow money in order to keep the economy liquid. The word FREE has become so common place in marketing that it has become a nickname for WORTHLESS.

So I was quite happy to see that Apple had reported its highest profit report in contradistinction to the World Economy having gone SPLAT. Nothing Apple sells is for free. The opposite is true. It sells at a premium and makes a healthy profit. Yet I have attended many conventions and read many marketing experts who say the best way to get your product out there is to offer it for FREE.

How to understand the paradox? It is not so simple as to say that a gift cheapens the giver. Or that entitlement cannot be resisted. A free trial will get the product into the customer’s hands. But then you start to lose control. There are two psychologies at work here. Entitlement and Ambition. If you think about it further, you will realize that these are polar opposites. Ambition is to strive for. Entitlement is to stagnate.

Apply a customer-centric marketing scenario: if the relationship is built on the customer’s Entitlement values, then you won’t find room for growth. Any improvements in service or quality will just feed Customer Entitlement and you will have to keep adding more value to maintain the current relationship, while cutting into your product margin. But, if you focus your marketing on your customer’s values of Ambition, then it drives you to innovation, invention and a means to grow the premium value of your product. This is how Apple is distinct from the other PC vendors.

We have known for a long time in marketing that price promotion kills margin and resets the bar of customer expectations to a lower level. But did we ever consider how we have bred a generation of entitlement sociopaths? The sense of entitlement over all material aspects of our society is deeply embedded. It is only the products that are the fruits of customer Ambition that can truly succeed without the ubiquitous FREE offer. Those products are the ones we want to pay more for. It satisfies our Ambition.

So what do you think? Is FREE a death word in marketing. Any takers?

Written By Jon|Advertising Truths, B2C, Marketing Strategy, Uncategorized|Comments Off

The Fool’s Gold Rush

Early adopters are frequently thought to be the leading edge of the next mammoth venture, inviting speculators and venture capitalists to whet their expectations for the next iPod/iPhone/Blackberry revolution. Yet, in many cases early adopters turn out to be the only segment that values the product or service and the venture stalls beyond this low-hanging fruit. This is probably not what a myriad of high-tech hopefuls want to hear right now. But I am not the voice of despondency. The dot.com meltdown did that already. I am saying that there is a way to eliminate the threat of over-promising and getting burned.

How does the over-promising come about? The goals-oriented marketer defines a market, measures performance based on test marketing (or early adoption) and extrapolates based on an exponent of the total market volume. Call this building Castles in the Air, based on a model built on the ground. We love to do it and dream of success delivered through incomparable genius. It’s exciting, and on paper it works for accountants as well as marketers. Take a business model, then maximize it to the power of ten or a hundred, or a thousand. Be as greedy as you dare. “Gee! If we only tap into 5% of the total market we’ll be gazillionaires. And our product is 25 times better than anything out there.”

How to avoid getting burned: The customer-centric marketer researches the values a customer has in regard to a particular product or service, and then defines the market potential according to those values.

Example: Grocery Gateway – goals-oriented approach: online order, home delivery, early adopter uptake is great, shows significant growth potential. All things being equal, 2 million shoppers in the GTA. Wow! Sink $30 million dollars into this and see where the rainbow ends.

Result: Grocery Gateway is now the private property of the Longo’s chain with 15,000 claimed customers and a constant viability issue how to make more money. Could be lots of reasons: logistics, costs, customer experience. The point is, when it launched, the world thought that Ship of Grocery Retail had embarked on a Dramatic New Course. Reality is that it is a niche segment for which the early adopters are probably still loyal customers. Plus $30 million invested. I think it is a good idea, but that all other regional online grocery delivery businesses are marginal players. Perhaps, one day, like the funeral home, school bus or waste management businesses some entrepreneur will buy each in turn and figure out an economy of scale to make a ton of money -– but on such thin margins I doubt it. More likely it will be the customer database that has more value than the retail business, and Longo’s that holds onto it.

Had the analysis been using a customer-centric methodology, the research would have come out differently, distinguishing between those who like to shop, those who don’t trust the Internet, those that are comparison shoppers, those whose strange work ethics prohibit ordinary shopping habits, those who are agoraphobes, insomniacs et al. And the answer might have been “You need $4 million” and there are only 15,000 potential customers for this service. $30 million for a GTA based distribution franchise sounds chunky to me. I think they were hoping for 150,000 customers – less than 10% of the market. Instead they have less than 1% of the market.

Written By Jon|Customer Focus, Marketing Strategy, Uncategorized|Comments Off

The Vicious Circle of the Marketing Cycle

I have spoken throughout this blog about the problems of the goals-driven enterprise, as opposed to the customer-driven enterprise. The goals-driven enterprise has one mandate: to leverage its assets to achieve maximum wealth. The fastest way to do this is to tender shares publicly. This is how the shareholder becomes more important to the enterprise than the customer.

In an economic downturn, in order to maximize shareholder value the enterprise cuts prices to stimulate demand and cuts costs to maintain a margin. Marketing investment becomes highly expendable. What the enterprise is effectively saying is, “My products and my customers are now worth less to me so I am going to invest less in them so that my shareholders don’t complain about achieving a lower rate of return on my customer investment.”

This is perfectly reasonable accounting view of the marketing cycle. The Corporate Treasury says “When I am profitable I don’t mind risking some of that money in marketing as as long as I can see growth. When there is no growth then marketing is futile and it will be erased from the bottom line as long as I can prove in the books of accounts that it does not fuel growth.”

Let’s look at the possible consequences of this strategy:

– When you stop communicating with your customer and lower the price of your product, what does that do to the perceived value of the product, service or business? It creates a ‘new normal’. The value of the relationship with the customer flies out of the window and the product becomes a commodity item, indistinguishable from other low-cost solutions available.

– What happens when the economy comes back? The compelling reason customers bought your product/service in the past has been lost as the relationship linked through COMMUNICATION was severed by the Treasury. You find that your competitors have caught you up, or overtaken, and you realize that your name no longer carries weight. So what do you do? You hire an expensive branding or rebranding consultant and revamp all of your marketing literature and advertising to overcome the inertia caused by the vacuum that you created.

This gamble might pay off. But if it doesn’t the shareholders will excoriate you for failure and try to eject the Board. Or another competitor that did not cut of communication with its customers steamroller you into being bought. If you don’t believe this happens then you aren’t looking.

So how to get out of the vicious cycle? Be a customer-centric enterprise. When there is an economic downturn adapt to your customers new realities without divorcing the relationship and cutting off communication. Work with your marketing partners to find more cost-effective solutions that keep the customer dialog and relationship going. Find ways to add value better than cutting your price.

Those who say it can’t be done do not deserve the title of Marketing. Marketing is the meeting point of customer need and product supply. There is always a way to communicate value that supports this relationship connectivity. You may have to be more creative and give up on some of your personal goals achievement in the short term. But, customer-centric marketing establishes loyalty, frequency and continuity as its scale of success. If you cannot align your business to a customer’s values in an economic downturn then you are a goals-driven enterprise and you will be punished by your shareholders at some point for failing to engage customers over the long haul.

That’s when the vicious cycle comes and bites you where it really hurts – at the peak of your career development.

Written By Jon|Marketing Strategy|Comments Off

Marketing ROI

I have been doing a lot of reading on ROI lately and found that writings on this can vary quite significantly on how to address this, and yes it appears to be very muddy. At the end of the day though, the big question still comes down to “How do we know we are spending our marketing dollars effectively – and how do we demonstrate it to others?”.

When trying to answer this question, there is not one clear cut ROI formula that defines this that can be applied universally for all marketing activities. (I am stopping here but his comments continue in the forum)

Reply from David McNab:
Here is a thought that might incite fear in the hearts of marketing departments everywhere – instead of muddling around with a whole sloough of measurements of ROMI, ROI, ROC and the like for measuring marketing performance why not simply make the marketing department (probably along with sales) accountable as a profit centre ?

This isn’t hard. Simply “sell” the products to Marketing at a discount (sales price less industry average marketing and sales percentage) and let them live or die on the profit they make.If the spend doesn’t drive excellent returns marketing loses. If it does, they win. Tie bonus to the results and we have accountability.

No-one does this. Hmmmm I wonder why … ?

My contribution to the thread:
That would strike more fear in the hearts of the Treasury and the shareholders. The marketers perpetual vision of success would make him/her the most likely to want to grab hold of the reins. But it takes more than marketing sense to make a business flourish.

ROI is a simple calculator in a small business environment. Just ask the owner. He knows whether the money spent had any payback. The simplicity of the question gets lost in a more complex enterprise. And it is our own fault. The inability to define a marketing ROI is because marketers still execute programs based on assumptions and then develop complex rationale, couched in the finest jargon and best-case case studies that they cherry-picked to win their point.

For example, brand advertising => top of mind => market share growth => profitability. It is a leap of logic that baffles accountants, because, while it sounds logical and insightful, there is still the no-name bottler selling more soda that Pepsi, without spending a nickel on marketing. Sometimes it’s true and sometimes it’s not. But the marketing dogma says “It’s empirically true.”

We now live in a state of technology where marketers can develop program models that are so targeted to a specific customer segment or objective, ROI should be a constant measurement per campaign. But it is easier for marketing to say, “We think this is a good idea. Let’s try it and see.” That’s a sink-tank not a think-tank. And do we ever fear failure. Nothing hurts quite so hard as being told by someone who knows zip about your profession that your last campaign bombed and you have to fumble for excuses.” That ended my posting. But the adjunct that I would put in this blog is that Customer-centric marketing is designed for ROI measurement. When you define your marketing based on customer values you can measure the uplift of a specific campaign because you are marketing with an identifiable objective rather than a catch-all mentality. The focus of customer-centricity identifies the real drivers of your marketing programs. There is a common failing of a goals-driven enterprise – fling many things at the wall to see what sticks, figure out later what it was and explain to accounting why your marketing budget should not be cut by 50%, even though 50% of your investment was wasted.

Written By Jon|Marketing Strategy|Comments Off

Previous 123 Next

blog: Marketing Strategy

The Government is the Nanny of the State

Which End of the Telescope Do You Use?

Honesty In Relationships: Part II

Honesty in Relationships: Part I

CORPORATE MASH-UPS CAN PROPEL YOUR BUSINESS THROUGH TOUGH TIMES

ENTITLEMENT AND THE FREEBY GENERATION

The Fool’s Gold Rush

The Vicious Circle of the Marketing Cycle

Marketing ROI

Jon Sherrington

Owner, Strategist, Writer – Hydrogen Creative Inc.

Categories

Archives